TAG Industrial Watch: March 1, 2025

President Trump has announced he still plans on levying tariffs on Mexican and Canadian imports in return for increased border protection. Effective March 4th, Trump signaled he will enact 25% tariffs on America’s closest neighbors, along with an additional 10% tariff on Chinese imports (bringing the total to 20%). The tariffs on Canada and Mexico violate the President’s own free trade agreement negotiated in 2018 known as the United States-Mexico-Canada Agreement (USMCA), which succeeded the North American Free Trade Agreement (NAFTA). Although tariffs are a form of tax on one’s own citizens, the tariffs put Mexico and Canada in a political position to levy retaliatory tariffs on their U.S. imports, risking a trade war among three nations.

In recent years, major port cities such as Laredo, Texas, situated along the U.S. and Mexico border, became top beneficiaries of previous tariffs levied on Chinese imports. The phenomenon known as “nearshoring” allowed Mexico to leapfrog China as America’s largest importer as Chinese imports were essentially redirected through Mexico for assembly to avoid the tariffs and then imported into America. The president’s new tariffs cover up the nearshoring loophole, which means that all things being equal, cross-border trade could decline if the tariffs remain in place. The big-box warehouses developed along the southern border stand to be impacted the most by long-term tariffs, reinforcing the need for industrial investors to focus more attention on small and specialized facilities.

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